Never take probationary employees for granted!

Why is it necessary for a new employee to be put under a probationary period? Essentially, a probation is a trial period where an employer will assess and evaluate an employee to determine if the new hire is suitable for employment with the organisation. It is a period when the employee may prove that he is suitable for regular employment as a permanent employee, and will meet the standards set by the employer.

In Malaysia, the term ‘probationer’ is not defined anywhere in the Employment Act 1955 (EA) or Industrial Relations Act 1967 (IRA); however, the EA highlights the fact that a probationer enjoys all the same rights and benefits as confirmed employees. A probationer is entitled to a security of tenure. Therefore, never take them for granted – a probationer’s service MUST NOT be terminated without just cause or excuse.Just like a confirmed employee, in the event a probationer considers himself being wrongfully dismissed, he reserves the right to report to the Industrial Relations Department, under Section 20 of the Industrial Relations Act 1967, for unfair dismissal, within 60 days from the date of dismissal. If the Court finds that the probationer’s service was terminated without just cause and excuse, the probationer is entitled for a compensation in lieu of reinstatement of a maximum of 12-months backwages based on the last drawn salary. Beware, one wrong move with a probationer may risk your business of financial burdens. This is when the exclamation “You’re FIRED!” can actually backfire!

Although the law does not impose any limit on how long a probationary period may be, there is an expectation that the employer will be reasonable. It is typical for a probationary period to last no longer than six months, with possibilities of extensions for a further six months should the probationer’s performance not meet the Management’s expectation. During the probationary period, the Manager should follow a formal structured procedure, which includes a series of monitoring and formal reviews between the new employee and his Manager. The programme should be structured in a way that both parties are clear of what to expect. It is important that the Manager keeps full, clear records and documentation of review meetings throughout the probationary period, and ensure all review documents are signed off by both parties, with a copy being given to the employee. This is aimed at assessing and reviewing the employee’s performance, capabilities and suitability for the role.A probation must be expressed as a term of the employment contract; with the probationary period clearly set out in the employment contract prior to the commencement of work. Careful thought must be given when drafting a probationary clause that will comply with the EA and protect the employer from wrongful dismissal claims. This includes the termination notice clause. The termination notice is always necessary, unless a probationer is terminated due to a misconduct. The notice period for termination must be according to the employment contract. In the event the employment contract does not spell out a notice period, the notice period under Section 12 of the EA is applicable.

Undoubtedly, probationers are under trial during the probationary period; however, it is by no means absolves an employer from legal duties with regards to that employee. The employer must ensure that probationers are given a fair opportunity to improve their performance, before ultimately deciding that a probationer is a poor performer who’s not fit for the job. This includes having regular discussions of any problem areas at the earliest opportunity, providing regular constructive feedback and action plans, providing support and guidance which includes training and coaching sessions. Additionally, employers must ensure that they assess probationers in a manner that is not discriminatory or in bad faith, they impose reasonable standards of conduct and that the employee must be measured against the standards which are made known to the employee.Should the employer fail to meet any of the above duties, it may also be deemed as a wrongful dismissal.

As mentioned earlier, employees’ probationary period may be extended. However, the question is – will a probationer continue to be under probation if the company fails to issue a confirmation letter at the expiry of the probationary period? The law states that a probationer shall not be deemed confirmed unless there is an express act confirming the employee (by way of letter, salary increment or entitlement of benefits). If a probationer has not received confirmation at the expiry of the probationary period, yet is given a salary increment, the employee definitely has a strong case that the employer is satisfied with his/her performance, and is confirming the position.

Generally, the principle of ‘just cause and excuse’ means that the employer must have proper justification and reasons to terminate the employee. The threshold will vary depending on the reasons for termination. The Industrial Court also takes into account procedural fairness, so it is also entirely possible that an employer may have good grounds for dismissal but still lose the unfair dismissal case because the dismissal was procedurally unfair or against the rules of natural justice.Ramifications of an unfair dismissal claim can be far-reaching and in some cases, catastrophic to business. An employer who does not invest in doing some groundwork before termination may find himself begrudgingly paying a large settlement sum to a dismissed employee in order to avoid more significant liability.